Stricter CSP requirements urged

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Infrawatch PH is urging the Department of Energy (DoE) to implement stricter rules in the competitive selection process (CSP) of power distribution utilities.

The call came after three power generators were disqualified from Manila Electric Company’s (Meralco) CSP bidding for 1,800 megawatts of power supply.

Infrawatch PH is a thinktank focused on major public infrastructure and development projects in the country.

“While the CSP has been proven as a viable and transparent process to ensure the least cost to electricity consumers, the DoE should implement stricter rules to ensure that bidders have proven local track record and pose no national security risks,” according to Terry Ridon, Infrawatch PH convenor and former House energy committee member.

Ridon said new CSP rules should thoroughly vet the track record of bidders of future power supply.

“All bidders except one are familiar names in the power industry. These firms have already been generating power for various distribution utilities (DUs) in the country even prior to the current 1,800-MW Meralco bid,” Ridon explained.

He said the same cannot be said for one bidder, Kingstone Energy. He emphasized that “a proven track record in the local power sector should be indispensable in CSP bidding, as its boosts the integrity of the entire bidding process, and raises consumer confidence on the viability of future power supply.”

He added that 1,800-MW of future power supply is no small matter to be left to companies without a local track record, as this constitutes almost twenty percent of Luzon’s 2020 peak power demand of 10,570 MW.

“We cannot allow twenty-percent of peak power demand to be cornered by firms without a local track record.“

Ridon added that Kingstone’s disqualification reflected its failure to grasp local rules and regulations, specifically President Rodrigo Duterte’s pronouncement banning new coal-fired power plants during his term.

“This presidential directive has been reiterated by Energy Secretary Alfonso Cusi when he said that government will no longer accept applications for new coal power plants.”

In November 2020, Cusi said, “The moratorium on greenfield coal-fired power plants applies only to the ones that have not yet been proposed.”

Ridon said the door on new coal-fired power plants has been effectively shut by the President and Secretary Cusi.

“Unless Kingstone can show that its proposal is not within the purview of government’s coal-fired power plant moratorium, it had no business participating in the Meralco CSP.”

Ridon said the importance of local track record also relates to the country’s national security challenges.

“Senate deliberations on foreign interference in the country’s transmission sector has not yet even been concluded. The country can ill afford another round of foreign interference in the country’s distribution network, especially covering the national capital region.”

Ridon said while the Electric Power Industry Reform Act (EPIRA) liberalizes equity restrictions on power generation, government is not powerless to require national security clearances for new power plants proposals.

“These national security clearances may be made part of the CSP process in order to guard against illicit foreign interference into our power grid.”

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